Tuesday, November 6, 2007

ICICI Bank fined for Rs.50 lakhs

New Delhi, Nov. 5: A consumer court has fined ICICI Bank Rs 50 lakh for hiring “goons” to recover loans and asked it to pay another Rs 5 lakh to the victim whom the gang “mercilessly thrashed”.

The fine is among the highest by an Indian consumer court on a bank. But banks usually get hefty damages stayed by apellate courts after which the matter can drag for years.

Recovery agents hired by the bank beat up the client, Vinod, and forcibly took away his car after his failure to pay a few instalments. Vinod was hit with iron rods and left bleeding on the road with serious skull wounds.

“No civilised society governed by the rule of law can brook such kind of conduct,” the Delhi state consumer commission president, Justice J.D. Kapoor, said.

Last week, the Reserve Bank had said it might impose a temporary or even a “permanent ban” on banks rapped by the high courts or the Supreme Court over “abusive practices followed by their recovery agents”. In February, the Supreme Court had told banks not to hire goons to recover loans.

Kapoor slammed the “audacity and impunity” with which some banks have been flouting the apex court’s orders and compared them and their recovery agents to “yahoos”, a boorish, brutal race in Jonathan Swift’s Gulliver’s Travels.

The commission rejected the bank’s plea that the sole responsibility for any illegal action lay with the recovery agents themselves. The Reserve Bank has said that banks are responsible for their loan recovery agents’ actions.

Kapoor found ICICI Bank guilty of “unfair trade practices” and issued notices to its collection manager and the CEO of the recovery agency, asking them to explain the violation of apex court orders.

The bank must also explain why further action should not be initiated against it under the Consumer Protection Act, 1986, which can involve jail terms.

A spokesperson said ICICI Bank had not received a copy of the judgment and therefore could not comment.

Several private, nationalised and multinational banks and financial institutions have been fined in forcible recovery cases. Some of the fines ICICI Bank had earlier faced were smaller, ranging from Rs 85,000 to Rs 1 lakh.

But when the Delhi state consumer commission asked ICICI Bank and American Bank to jointly cough up Rs 25 lakh as fine for unsolicited calls sometime ago, they moved the high court and got it stayed.

The commission had also fined all the major telecom companies a combined sum of Rs 50 lakh in the case. The total fine of Rs 75 lakh was the highest imposed in a single case by the commission, which can award fines of up to Rs 1 crore.

Another 50 lakh “punitive damages” will be deposited with consumer commission welfare fund.

Reserve Bank has already said that it might impose a temporary or even a “permanent ban” on banks knocked by high courts or the Supreme Court over “abusive practices followed by their recovery agents.”

Supreme Court had also told banks not to hire goons for recovery of loans.

NEW DELHI: The Delhi Consumer Commission fined the ICICI bank a whopping Rs.50 lakh for employing “goons” to recover loan. It deplored the practice of the banks intimidating consumers to pay the instalments.

The Commission also ordered the ICICI to pay Rs.5 lakh to a consumer, who was mercilessly beaten up by the recovery agents. They snatched a loaned car from him.

It deprecated the “audacity and impunity” with which the banks have been effecting forcible possession of vehicles. — PTI

NEW DELHI: The Delhi Consumer Commission fined ICICI bank a whopping fine of Rs 50 lakh for employing goons to recover loan and deplored the practice of the banks intimidating consumers to pay the installments.

In the significant judgement, the Commission deprecated the "audacity and impunity" with which the banks have been effecting forcible possession of vehicles and ordered ICICI also to pay Rs 5 lakh to a consumer, who was mercilessly beaten by the recovery agents while they snatched a loaned car from him.

"No civilised society governed by rule of law can brook such kind of conduct," the Commission's President Justice J D Kapoor said, adding the violent methods adopted by the recovery agents were serious violation of "human rights".

Holding the ICICI Bank guilty of "unfair trade practice," the Commission termed such miscreants as "yahoos" and said they are boorish and a brutal lout, who care a fig for legal and judicial authorities, including the Supreme Court.

While taking to task the leading bank, it vented its anger on ICICI for flouting the apex court's direction that restrained all the financial institutions from employing musclemen to recover a loan amount or possession of a vehicle.

The Commission, also comprising Member Rumnita Mittal, issued notices to the Collection Manager of ICICI and the CEO of the recovery agency, seeking their explanations over blatant violation of the direction of the highest court of the nation.

Its strong worded order came recently while hearing a complaint by Tapan Bose, whose loaned car was taken away by some recovery agents after beating up his friend's son with iron rods on January eight, leading to serious injuries on his skull and other parts of the body.

ICICI Bank fined Rs. 50 lakh for using goons for loan recovery

In a significant judgment that attempts to penalise banks for the patronage of recovery agents who use force to get back the loan or the bought item, a Delhi Consumer Commission has fined ICICI Corp the sum of Rs. 50 lakhs for employing a recovery agent who used goondas to physically injure a person in the process of forcibly recovering the item.

There have been many cases in the recent past when consumer commissions and courts have deplored the practise of using force to recover loans, and in fact, the Supreme Court has given strictures against such a tendency by finance companies. There is a process in law to recover assets, and it may be seemingly slow, but that is the same pace of justice as for other parts of the law. There is no provision in the law to forcibly recover the car or other asset that is bought using the loan amount, and certainly not at all to actually injure or otherwise harm the person. Refer the judgment:

NEW DELHI: The Delhi Consumer Commission fined ICICI bank a whopping fine of Rs 50 lakh for employing “goons” to recover loan and deplored the practice of the banks intimidating consumers to pay the installments.

In the significant judgement, the Commission deprecated the “audacity and impunity” with which the banks have been effecting forcible possession of vehicles and ordered ICICI also to pay Rs 5 lakh to a consumer, who was mercilessly beaten by the recovery agents while they snatched a loaned car from him. While taking to task the leading bank, it vented its anger on ICICI for flouting the apex court’s direction that restrained all the financial institutions from employing musclemen to recover a loan amount or possession of a vehicle.

In such cases, it is also important to also have a police case as all such forcible snatches are illegal. Such police cases have in the past become embarrassing for the finance company in question, and have moved them to become more careful.

The finance companies and banks use the argument that doing the legal process is cumbersome, and encourages people to willingly default on their loans. The companies may be right in this regard, but they have themselves got into the business of providing loans where there is greater risk of default. They need to get away from the concept of free-for-all loans that they seemed to indulge in, and give loans after far more investigation to avoid default risk.

It is also a very puzzling reflection on the state of law in the country that a company can actually hire recovery agencies who they know use force to recover loans, including using actual violence where necessary; and that they have no worry about the police intervening to enforce the law.

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